Chelsea announces a positive trial, but the endpoint isn't what the FDA wants.

But when the primary endpoint was designed to assess efficacy after just one week, the fact that Northera passed doesn't matter all that much. Chelsea's share price -- down 36% yesterday -- tells the full story.

You'll recall that the Food and Drug Administration rejected Nothera earlier this year because the agency wanted longer-term data on the drug for treating neurogenic orthostatic hypotension, a disease associated with Parkinson's disease where patients experience lightheadedness and even fainting when standing because of a sudden decrease in blood pressure. The approval process mirrored InterMune's (NASDAQ:ITMN) Esbriet and Orexigen's (NASDAQ:OREX) Contrave, where the FDA advisory panel recommended approval of the drugs but the agency ignored the decision by the panel of outside experts and rejected it.

The company had a clinical trial called 306B that it hoped at the time would be enough to convince the FDA to approve the drug. Unfortunately, the agency decided the trial wasn't sufficient for approval, so the study turned into a rather large pilot experiment for a later trial.

Northera met its primary endpoint of reducing dizziness/lightheadedness after one week of treatment. But the more important data came from patients in the trial that stayed on Northera for another seven weeks since the FDA wants the longer-term data. Unfortunately, the average improvement in the dizziness wasn't statistically significant through week eight. Patient-reported symptoms are highly susceptible to the placebo effect, which might be the problem here.

Patients taking Northera had fewer falls than patients taking placebo, but it wasn't statistically significant nor is it clear whether the FDA will accept that measurement as an endpoint.

Chelsea plans to meet with the FDA in the beginning of next year and then start a new trial in the second half of 2013. The neurogenic orthostatic hypotension market is wide open -- Shire Pharmaceuticals' (NASDAQ:SHPG) ProAmatine is approved to treat the disease, but doesn't work that well -- but I don't see much point in owning Chelsea at this point. Sure, it's cheap, and I think Northera likely works, but there's just too much uncertainty that won't be resolved for many months to make it interesting.